Oral statement to Parliament

Manufacturing and growth

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Introduction Master Cutler - it’s a great pleasure to be here today, to help launch the Global Manufacturing Festival. As the home of the …


Master Cutler - it’s a great pleasure to be here today, to help launch the Global Manufacturing Festival.

As the home of the Industrial Revolution, Britain has a unique manufacturing heritage. But while we should not ignore our past, we should be focused on our future economic potential.

Sheffield exemplifies this principle. It was, of course, one of the UK’s manufacturing heartlands. Harry Brearley’s radical invention of stainless steel earned his home city a global reputation, and changed an entire industry.

But today, Sheffield is home to a new generation of manufacturing pioneers. ITM Power is leading the way in developing hydrogen fuel cells. Zoo Digital is making a name for itself designing video technologies for the entertainment industry. JRI exports its orthopaedic implants to markets around the world.

Now some people would have you believe that industry in this country is irrelevant. In fact, the UK is the world’s sixth biggest manufacturer. The sector generates £140bn a year, around 11% of total Gross Value Added, and it accounts for 55% of total UK exports.

Of course, I know that many manufacturers suffered in the recession. But the fact that manufacturing output is now leading the way is a real testament to the sector’s resilience and ingenuity.

In fact, figures for December show that manufacturing growth has reached a 16-year high, with output, export orders and employment all rising.

Advanced Manufacturing Growth Review

This Government believes that manufacturing and engineering are vital to our economic future.

That is why we have already acted to improve the environment for industry - with lower and simpler business taxes; investment in apprenticeships; wider access to finance; and a government-wide commitment to boosting exports.

But we also understand the need for long-term policies which will help UK manufacturers better compete in the global marketplace.

That work has started. The Advanced Manufacturing Growth Review, launched late last year, is a root-and-branch analysis of the barriers to growth, and the structural reforms needed to encourage a balanced, sustainable economy.

Next week we are convening an Advanced Manufacturing Summit, bringing together all the key players, in industry, government and academia. Involving senior Ministers across Government, it will, create the foundations for a new partnership with industry.

To help shape our programme, we are focusing on three core priorities:

  • First, to grow the manufacturing sector, by dismantling barriers to business.

  • Second, to become Europe’s leading exporter of high-tech goods and services.

  • And third, to change public perceptions of the sector so it can attract the next generation of talent.

Let me explore those three themes.

Growing UK manufacturing

In recent years business has been held back by barriers that stymie growth - such as costly red tape and regulation; a complex and burdensome tax system; and inadequate infrastructure.

Two problems particularly stand out - access to finance, and the failure to invest in technological innovation.

We know that some viable businesses - especially SMEs - are struggling to finance investment and expansion. So unblocking the flow of credit, and increasing the availability of debt and equity finance, is a priority.

The commitments now made by the British Bankers Association to finance the economic recovery are encouraging. However, actions speak louder than words, so we are determined to ensure those commitments become a reality.

In the meantime, the Government is offering a lifeline to small firms. We are extending the Enterprise Finance Guarantee until 2015, unlocking up to £2 billion of additional lending over the next four years.

We are also increasing the Enterprise Capital Funds by £200m over the next four years, enabling more than £300m of venture capital investment.

And we are keen to see an expansion in Business Angel finance, so we are looking at how to create a more investment friendly climate for them.

At the same time, we are investing £50 million in the Manufacturing Advisory Service, which will next year become a nationally run but locally delivered service.

MAS, which supports SMEs in becoming more productive, is hugely valued by the sector. So it will continue, working with companies to improve business processes and boost productivity.

We have also announced ambitious plans to invest £200m in a network of Technology and Innovation Centres - and we are fast-tracking the centre for High Value Manufacturing.

The centres are based on models used in some of the most dynamic economies around the world. Countries like Taiwan and South Korea have invested in cutting-edge research and transformed their whole industrial base.

They have moved from low grade processing to the high-end, high-value manufacturing that is so successful in Britain, and which we want to expand.

The Centres will bridge the gap between academia and business. For example, by supporting in-house research; or providing access for smaller companies to skills and equipment they could not otherwise afford.


I am confident these Centres will help dynamic UK manufacturers to develop in fiercely competitive global markets.

And they will play a crucial role as we strive to meet our second objective - boosting UK manufacturing exports. This Government’s new emphasis on trade and exports will power that drive.

Globalisation is creating tremendous new opportunities for UK manufacturers, as markets expand and international value chains grow. Easier access and technological change have made it easier to enter those markets.

If they do, there is a big prize at stake - a whole generation of new customers. If emerging economies continue to grow at the pace that they have in recent times, hundreds of millions of new middle-class consumers will be created, providing an expanding market for high value goods and services. And we shouldn’t underestimate the high regard for British premier brands.

So trade promotion and export opportunities are now benefiting from strong leadership across the whole of Government. And the Prime Minister has made it a personal priority.

In the past few months he has led high-profile trade missions, comprising senior Government Ministers and business leaders - to India in July, and China in November. In addition, the Secretary of State led a trade delegation to Brazil in September. Many more missions are planned.

As these initiatives clearly illustrate, creating new commercial opportunities will be at the centre of British diplomacy, and at the heart of bilateral relations with our international partners.

Developing new talent

Of course, to succeed globally, British companies also need to attract the next generation of engineers and technicians.

So our third priority is to attract and train the next generation, not least by changing perceptions of industry and the careers on offer.

That’s why, last month, I hosted an event at 11 Downing Street, with Engineering UK, to discuss how we can work together to fire up young people’s imaginations and show them the dynamic reality of modern manufacturing.

One misconception is that engineering is poorly paid, especially when compared to say, accounting or the City.

In fact, skilled engineers enjoy excellent comparative remuneration.

So we need to spell out to young people that if they’re looking for a skilled, well-paid job that has good prospects - high value manufacturing and engineering offers them a great career.

But we also need to challenge the wider negative perception about industry.

That’s why my department is also hosting a series of exhibitions promoting innovative UK manufacturers and their products. We’ve exhibited everything from a JCB to a zero carbon motorbike in the Department’s foyer, through which thousands of people pass.

We intend to do a lot more in this area in the months ahead. And I believe that the Global Manufacturing Festival can also spread the word about the real potential of industry.

Of course, in attracting people, industry must ensure they get the training they need.

That’s why we are transforming the skills and further education system to help firms meet that need.

So we are setting further education colleges free from bureaucratic control by Whitehall. We want to ensure they support economic growth by responding to the needs of employers and learners - and not the whims of politicians and bureaucrats.

This Government is also committed to creating a new generation of University Technical Colleges. Students with technical aptitude should have the option of starting vocational training from the age of 14, alongside their core academic education.

There is substantial demand for these institutions from businesses and communities, who are enthusiastic about the benefits they would bring. We intend to meet that demand.

And we are increasing funding for adult Apprenticeships by up to £250 million by the end of the Spending Review period, creating up to 75,000 more places per year than the previous Government.


So, Ladies and Gentlemen, this Coalition Government is committed to putting a renewed and reinvigorated manufacturing base at the heart of a strong and balanced British economy.

I believe we have made a good start. But I am well aware that we still have a long way to go.

That’s why we want to work in partnership with manufacturers - charting a course for the next decade so UK manufacturing can plan and invest with confidence for the long term.

I wish the organisers of the Global Manufacturing Festival Sheffield every success. And I look forward to our discussions about what more needs to be done - by Government and by industry - to enable our country’s industrial potential to be fulfilled.